By Shelley Sakala

In this month’s real estate column, local Realtor Shelley Sakala responds to the question: “We’ve been waiting and waiting for home prices to come down, but now mortgage rates keep going up! Do you think rates will return to where they were last year?” asks Nina, a Phoenix resident.

THE EXPERT’S ANSWER
No one can blame you for wanting to turn back the clock to the days of super-low interest rates––3%, 4%, even 5% seemed like a bargain compared to today. The rates were so low last year that they were hardly a factor when calculating the affordability of a home. But now it’s a whole different story. According to realtor.com, the median mortgage payment is $900 a month higher than it was a year ago. For most buyers that’s a deal breaker. Not only does it change how much house you can buy, but it can also sometimes determine whether you can even afford to buy at all.
Allow me to offer some perspective…yes, interest rates were lower last year. But you may also recall that last year we went through several months of homes flying off the market in a matter of hours. Cash buyers and investors were gobbling up what little inventory there was, boxing out the average home buyer. There was no negotiation of prices. No concessions. Sellers were able to get the inspections and appraisals waived. If there is any upside to today’s higher interest rates, it’s that the real estate market is now a little better balanced. Home prices are back to being determined by fair market value rather than the hyper-demand of a buying frenzy.

As to whether you should wait and see what happens to interest rates, here’s what experience tells me:

You can’t go back in time, so it does you no good to keep comparing today’s reality with yesterday’s history.

Everything is cyclical. Rates will go up. Rates will come down. You can spend a lifetime charting and predicting mortgage rates and never actually pull the proverbial trigger because you’re afraid a better deal is right around the corner. They call this paralysis by analysis, and I don’t recommend it.

The current market allows you some time to be patient, shop around, and even ask for concessions from the seller to help lower your monthly payments. You may be paying more for a home, but the overall experience is far calmer and less stressful than it’s been in quite a while. And that’s gotta be worth something!

Bottom line: If you love the house and you can afford it, then now is the perfect time to buy it.

Shelley Sakala is a local realtor and owner of The Sakala Group Real Estate.